Subsidized loans for undergrad?

[JenniferinFL]

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This is probably a question with an obvious answer, I just want to bounce it off someone to make sure I'm understanding it correctly.

I qualify for a pell grant and subsidized loan to finish my AA. The pell grant is enough to pay for tuition, books and a few odds and ends. Initially, my first instinct was to decline the subsidized loan as I don't NEED it. But, I believe the limits for subsidized loans during the pharmacy program is somewhere around $5500 per year. That is only half of the tuition which means taking out a chunk in unsubsidized loans every year.
I don't think I'll need any of the subsidized loans for my undergrad studies. But, if I'm estimating correctly, I'll qualify for about $10,000 total in subsidized while I finish up my prereq's.
Would it make sense to go ahead and take that money anyways and just toss it in a safe deposit box to use for tuition when I'm in the pharmacy program? That would mean about $10,000 less in unsubsidized debt which would make paying the interest on the unsubsidized debt while in school a bit more affordable.
Obviously, if I take the money and spend it foolishly then I've just shot myself in the foot. But, I do have the self control to just put it somewhere and leave it there.
Am I missing anything?

 

[Farmacist2011]

This is probably a question with an obvious answer, I just want to bounce it off someone to make sure I'm understanding it correctly.

I qualify for a pell grant and subsidized loan to finish my AA. The pell grant is enough to pay for tuition, books and a few odds and ends. Initially, my first instinct was to decline the subsidized loan as I don't NEED it. But, I believe the limits for subsidized loans during the pharmacy program is somewhere around $5500 per year. That is only half of the tuition which means taking out a chunk in unsubsidized loans every year.
I don't think I'll need any of the subsidized loans for my undergrad studies. But, if I'm estimating correctly, I'll qualify for about $10,000 total in subsidized while I finish up my prereq's.
Would it make sense to go ahead and take that money anyways and just toss it in a safe deposit box to use for tuition when I'm in the pharmacy program? That would mean about $10,000 less in unsubsidized debt which would make paying the interest on the unsubsidized debt while in school a bit more affordable.
Obviously, if I take the money and spend it foolishly then I've just shot myself in the foot. But, I do have the self control to just put it somewhere and leave it there.
Am I missing anything?

That money gets sent to your school, not your personal safety deposit box. Go for Sallie Mae if you want to recklessly borrow. 😉

 

[MathDebate]

That's what I did. From what I hopefully understand, you have a 6 month grace period after school enrollment until you have to start paying. But you don't have begin paying if you enroll in school again within that 6 month period.

I've been holding on to the subsidized loans I received even though I don't need it at the moment. My plan is the same as yours since the loan won't have to start getting paid off until after graduating pharmacy school. (I think!) You (and I) should talk to a financial aid counselor about it to make sure.

That money gets sent to your school, not your personal safety deposit box. Go for Sallie Mae if you want to recklessly borrow. 😉

 

[mcalabr3]

This is probably a question with an obvious answer, I just want to bounce it off someone to make sure I'm understanding it correctly.

I qualify for a pell grant and subsidized loan to finish my AA. The pell grant is enough to pay for tuition, books and a few odds and ends. Initially, my first instinct was to decline the subsidized loan as I don't NEED it. But, I believe the limits for subsidized loans during the pharmacy program is somewhere around $5500 per year. That is only half of the tuition which means taking out a chunk in unsubsidized loans every year.
I don't think I'll need any of the subsidized loans for my undergrad studies. But, if I'm estimating correctly, I'll qualify for about $10,000 total in subsidized while I finish up my prereq's.
Would it make sense to go ahead and take that money anyways and just toss it in a safe deposit box to use for tuition when I'm in the pharmacy program? That would mean about $10,000 less in unsubsidized debt which would make paying the interest on the unsubsidized debt while in school a bit more affordable.
Obviously, if I take the money and spend it foolishly then I've just shot myself in the foot. But, I do have the self control to just put it somewhere and leave it there.
Am I missing anything?

I've received pell grants and subsidized loans throughout my undergrad. The money that was supposed to go to living/room and board got sent to my checking account (since I was living off campus).

If I were you I'd take the subsidized loan and if you don't end up using it...just pay it off right away. You personally don't need to be start paying the interest on that loan until you graduate.

 

[JenniferinFL]

That money gets sent to your school, not your personal safety deposit box. Go for Sallie Mae if you want to recklessly borrow. 😉

Yes, it does go to the school initially, but, because I'm living off campus the remnants will eventually go back to me if I understand it correctly.
I don't want to recklessly borrow, I want to borrow more intelligently. It just sounds like it makes more sense to go ahead and take the subsidized all along as it's offered and save up for when I'm in pharmacy and the tuition is greater then the amount available for subsidized.

Technically, I guess that the money is supposed to be used while your in the college you received the loan through. So, technically I would use that money towards rent and save my own money I would've used towards rent towards future tuition.

It just seems like it would make sense because it would be $10,000 less financed at 6.8%, it would be financed at I believe 2.4%.

I don't know though, maybe that's not enough savings to be worth the risk.

 

[amox]

It's a great idea as long as your responsible..

It is illegal however to store cash in a safe deposit box. However I really don't care, its up to your ethics.

Don't let cash sit, make some kind of interest, get 6month CD's or something per loan. I know the loan is 0% Interest for now, but why not make some money!

Good luck!

-amox

 

[owlegrad]

I am in the same position, over the past 2 years I have been taking out 2750 per semester sub(max for me) by govt. Including summer over 2 years for me that is about 16,000. I have this sitting in my money market account saved for pharmacy school.

It's a great idea as long as your responsible..

It is illegal however to store cash in a safe deposit box. However I really don't care, its up to your ethics.

Don't let cash sit, make some kind of interest, get 6month CD's or something per loan. I know the loan is 0% Interest for now, but why not make some money!

Good luck!

-amox

😱 I had no idea. Why?

 

[amox]

😱 I had no idea. Why?

Fully explained here

http://livesafely.org/financial-fre...eposit-box-is-not-a-safe-place-to-stash-cash/

 

[owlegrad]

Fully explained here

http://livesafely.org/financial-fre...eposit-box-is-not-a-safe-place-to-stash-cash/

Were you using illegal as hyperbole? Nothing in the article leads me to think it is illegal to keep cash in a safety deposit box, just unwise. Thanks for the link though.

 

[JenniferinFL]

It is illegal however to store cash in a safe deposit box. However I really don't care, its up to your ethics.

Don't let cash sit, make some kind of interest, get 6month CD's or something per loan. I know the loan is 0% Interest for now, but why not make some money!

Ah, there's something I didn't know. I've never had a safe deposit box before, so never knew that. This idea pretty much just hatched in my brain in the wee small hours last night so it's not that well thought out yet.

Thanks for the info, that changes some things for me..

 

[owlegrad]

Ah, there's something I didn't know. I've never had a safe deposit box before, so never knew that. This idea pretty much just hatched in my brain in the wee small hours last night so it's not that well thought out yet.

Thanks for the info, that changes some things for me..

I am not sure you should know it now.

I agree about stashing it in CD's or other interest earning account. No sense letting it sit around collecting dust when it could be making money for you.

 

[amox]

Were you using illegal as hyperbole? Nothing in the article leads me to think it is illegal to keep cash in a safety deposit box, just unwise. Thanks for the link though.

The article doesn't explicitly say its illegal, you are correct! Sorry... Read this part :

" But, the caveat is - you are not supposed to be hiding cash in a safe deposit box, and thus, it is not insured."

"More cautions against hiding your cash in a safe deposit box are:

• In the United States, the U.S. Department of Homeland Security could get a warrant to access your safe deposit box if the bank tips them off due to what they might perceive as “suspicious activity”, which could literally be anything, like too many regular visits. Other nations likely have similar legislation.
• The often abusive IRS can often freeze assets merely based on suspicion of probabilities, until the courts clear the accused."

Source : http://livesafely.org/financial-fre...eposit-box-is-not-a-safe-place-to-stash-cash/

The banks in my area have regulations against it. There is no federal laws against what you can and cannot put in. This website has more detail..

http://www.bankrate.com/brm/news/bank/20011023a.asp

Main concern is govt. getting $$

"McGuinn thinks the concern about keeping cash in a safe-deposit box stems from an IRS regulation prohibiting the concealment of cash to avoid paying taxes on it."

My bad 🙂 But still be cautious!

 

[JenniferinFL]

I am not sure you should know it now.

I agree about stashing it in CD's or other interest earning account. No sense letting it sit around collecting dust when it could be making money for you.

Unfortunately I'm pretty gun shy of banks at the moment anyways. While I'd like to invest it, at the same time I also think I'd prefer to bury it in the yard..

Ugh, ten years ago I would've gleefully put part in a savings account and thrown the rest into a CD or bought stock where I worked through their discount program and then resold it. Can't help but feel that I'm slowly evolving into that crazy person who hides money in a mattress and has enough canned food hoarded away to live through a zombie apocalypse.

 

[whatbout2morrow]

Technically, if you were to be audited in some way, accepting money each semester from the federal government beyond that needed to cover "qualified educational expenses" for that semester would constitute fraud. This subject matter is covered in entrance counseling that you undergo before you accept subsidized loans. You are given a detailed list of what you can use federally subsidized loans for.

Of course, like in many other things, this only matters if you are caught. Are you willing to take the risk?

Think about it. If there were no such restrictions, what on earth would prevent you from using student loan money for making down payment on a house or car, going on vacation and gambling it off, getting plastic surgery, or even lending it to someone else at a higher interest rate?

 

[JenniferinFL]

Technically, if you were to be audited in some way, accepting money each semester from the federal government beyond that needed to cover "qualified educational expenses" for that semester would constitute fraud. This subject matter is covered in entrance counseling that you undergo before you accept subsidized loans. You are given a detailed list of what you can use federally subsidized loans for.

Of course, like in many other things, this only matters if you are caught. Are you willing to take the risk?

Think about it. If there were no such restrictions, what on earth would prevent you from using student loan money for making down payment on a house or car, going on vacation and gambling it off, getting plastic surgery, or even lending it to someone else at a higher interest rate?

This is where it gets confusing. Cost of attendance includes room and board. I'm an independent student, married and rent is currently paid with my husbands income.

Direct quote from the federal student aid site:
"Using the loan for education expenses: You may use the loan money you receive only to pay for your education expenses at the school that is giving you the loan. Education expenses include school charges such as tuition, room and board, fees and indirect expenses such as books, supplies, equipment, dependent child care expenses, transportation and rental or purchase of a personal computer."

So, I'm allowed to use it for room and board. If I'm paying $600 per month for rent and will have $3500 available in subsidized loans, then obviously I will spend a lot more out of pocket for room and board than they are offering me a loan for. For the sake of argument, let's go ahead and assume that only half of the rent counts for me since I do share the apartment with my husband and daughter. Even splitting it in half, I will still pay $3600 for rent. That's not including transportation which is an allowed expense or even purchase of a computer which is an allowed expense.

Since they don't disburse the loan until late in the semester, it would stand to reason that they already plan for me to 'rob Peter to pay Paul' as I would be paying room and board on my own for almost 2 months before my school disburses the loan.

I guess it would be easier if they handed you a stack of marked bills and you had to use them specifically for rent only. But, it gets sent to my checking account and mingles with all the other little dollar bills in there and how can I be sure that my bank is sending the right little dollar bills from my bank to cover the rent check instead of the Dunkin Donuts drive thru.

It would be one thing if I only paid $1000 in rent annually and had free transportation, then I wouldn't have enough expenses that added up annually to use the value of the loan for education expenses.

As it is though, I have more than enough expenses in just half the rent to correctly use the loan.

Unless I'm missing something here?

 

[All4MyDaughter]

Not missing anything as far as I know. As long as you have enough expenses to justify the loan amount, you're fine. There is no way for the to prove or disprove precisely what you spent *their* loan dollars on. Like you said, it's not marked bills.

 

[Busta919]

Were you using illegal as hyperbole? Nothing in the article leads me to think it is illegal to keep cash in a safety deposit box, just unwise. Thanks for the link though.

I believe the legal allowable limit for cash is $7500. If you have this much money in hand and you do not have a reasonable reason for having that much cash in your possession, it is assumed you are doing something illegal and the cash can be siezed.

I believe it was recently, in the last couple of years, reduced from $10,000 to $7500. If you withdraw an amount that exceeds a certain level, $7500, the bank has to report this transaction to Uncle Sam or they get in trouble as well.

The basic idea is your Government does not want you to use cash. IF you are using cash, they cannot monitor your spending. The credit card companies definately don't want you to use cash. They definately want to know what you are spending your money on. They track your purchase history so that if someone were to steal your card, they know if the purchases made were inconsistent with your normal use.😱

 

[mcalabr3]

It's a great idea as long as your responsible..

It is illegal however to store cash in a safe deposit box. However I really don't care, its up to your ethics.

Don't let cash sit, make some kind of interest, get 6month CD's or something per loan. I know the loan is 0% Interest for now, but why not make some money!

Good luck!


-amox

Good point about the unethical part (if you were to take the loan and not spend it towards education/living expenses). So don't go investing the money in the stock market or something...so be responsible and like I said before pay it off if you don't use it.

 

[amox]

Well I used the loan money to pay my bills, then banked my income. Problem solved. 🙂

 

[mcalabr3]

Damn screw pharmacy... we should go into accounting....

 

[whatbout2morrow]

Unless I'm missing something here?

Nope, you're not missing anything here. You've got enough and more qualified expenses. Sheesh, how was I supposed to know you were not some dependent kid with no expenses whatsoever looking to bank some federal money? 🙄🙄

I guess it would be easier if they handed you a stack of marked bills and you had to use them specifically for rent only. But, it gets sent to my checking account and mingles with all the other little dollar bills in there and how can I be sure that my bank is sending the right little dollar bills from my bank to cover the rent check instead of the Dunkin Donuts drive thru.

Is this where I am I am supposed to laugh? Or feel belittled?😕😕😕

 

[JenniferinFL]

Nope, you're not missing anything here. You've got enough and more qualified expenses. Sheesh, how was I supposed to know you were not some dependent kid with no expenses whatsoever looking to bank some federal money? 🙄🙄



Is this where I am I am supposed to laugh? Or feel belittled?😕😕😕

I probably should have included more details in the original post. I have a tendency to assume that a lot of people are like me, but I completely forget that often your typical student doesn't have many expenses, still lives with parents and so forth.
I forget that I'm not exactly a traditionally aged student..

I didn't mean it to be belittling, I thought that you meant that their money had to be spent on rent so I was trying to figure out how they would mean me to do that when they disburse the money to a bank account that contains other money. It wasn't a jab at you, but, honestly I wouldn't have been surprised if that was a real requirement. I've seen some crazy requirements in other areas administered by the government.
My husband is an immigrant from Canada and during the immigration process we had to show that our finances were adequately co-mingled to prove we had a real marriage. It didn't count if he paid rent and I paid internet, we had to each pay on each thing. So, yeah, it was more of an "Oh god, not this again" thought than a belittling comment towards you.

 

[Farmacist2011]

Immigrant from Canada? That just sounded really odd to me. The first 2 words I think of when someone says immigrant is "illegal" and "mexico". haha

 

[whatbout2morrow]

....honestly I wouldn't have been surprised if that was a real requirement. I've seen some crazy requirements in other areas administered by the government.
My husband is an immigrant from Canada and during the immigration process we had to show that our finances were adequately co-mingled to prove we had a real marriage. It didn't count if he paid rent and I paid internet, we had to each pay on each thing. So, yeah, it was more of an "Oh god, not this again" thought than a belittling comment towards you.

😱 Wow.. Perhaps if both of you had a joint account to which you both would contribute money to be used for the finances, it would be equivalent to both of you contributing to all the bills? Anyway, I guess you guys don't have to worry about that anymore. Good luck!

 

[Medwell]

I qualify for a pell grant and subsidized loan to finish my AA. The pell grant is enough to pay for tuition, books and a few odds and ends. Initially, my first instinct was to decline the subsidized loan as I don't NEED it.

I have a question about this "pell grant"... do people just automatically get it without any academic obligation? It's literally just free money to pay tuition with?

 

[JenniferinFL]

I have a question about this "pell grant"... do people just automatically get it without any academic obligation? It's literally just free money to pay tuition with?

Not really, it goes to the school first and the amount is based on your credit hours and your estimated family contribution. If you have leftovers after tuition it can be dispersed to you, but apparently every school can handle that a bit differently. Back when I was a dependent student 10 years ago, I had to submit qualified receipts and then they would give me a check for the amount of the receipt. So I'd save all my receipts from buying text books and turn them in.

It doesn't sound like that's the case for me anymore, but, I'm not sure if that's because the school has changed their rules or if it changed because I'm an independent with an EFC of 0.

 

[JenniferinFL]

😱 Wow.. Perhaps if both of you had a joint account to which you both would contribute money to be used for the finances, it would be equivalent to both of you contributing to all the bills? Anyway, I guess you guys don't have to worry about that anymore. Good luck!

That was the funny thing, we couldn't have a joint account because I didn't have status in Canada and he didn't have status in the US so neither of us could be on the others bank account. At least, not at any of the banks we tried at.
So, we pretty much had to split every payment and send two separate checks to the same place. Though, then a lot of places here wouldn't cash a check from Canada, so then we'd have to get a notarized(?) money order so we'd have proof it came from his bank account and then send that to pay half a bill. I'm not sure what the type of money order was called, I want to say it was notarized, basically we got a printed receipt stamped by the bank and signed by a teller.

So, yeah, when you said that I was thinking it was similar.

 

[JenniferinFL]

Immigrant from Canada? That just sounded really odd to me. The first 2 words I think of when someone says immigrant is "illegal" and "mexico". haha

Ugh, tell me about it.. There's so much misconception about what's actually involved in immigration even immigration through a family member. All anyone seems to hear about is illegals, fraudulent marriages and anchor babies.

I will say one thing, whenever anyone talks about immigration being 'automatic' after marriage they catch an earful from me. 2 years of living on opposite sides of the border, $3000 in immigration fees and 3 nerve racking interviews later I have to say it didn't feel too 'automatic' to me.
AND we were a very simple case with no complications. Get one form wrong and your stuck in immigration limbo for years.